Quantum Rare Earth to raise $500,000 for Elk Creek project

The Vancouver-based rare earth company, owner of the Nebraskan Elk Creek project, plans to sell four million units priced at 12.5 cents each.

Every unit includes one common share and one share purchase warrant, with each warrant good for one additional share at a price of 25 cents for two years from closing.

Quantum said the new funds will go toward advancing its Elk Creek project as well as for general working capital.

The Elk Creek niobium deposit is the only primary niobium deposit in the U.S., and is also the highest-grade, large-tonnage undeveloped deposit in North America, according to the company.

Niobium is used in the production of high-grade structural steel, and is used in super alloys for applications like jet engine parts, gas turbines and electronic components.

The Elk Creek resource stands at 19.3 million tonnes with a niobium pentoxide grade of 0.67 per cent in the indicated category.

The inferred resource holds 83.3 million tonnes with a niobium pentoxide grade of 0.63 per cent, according to Quantum's website.

Niobium demand has increased on average by 10 per cent a year in the past decade, with growth forecast to continue in a similar fashion in the coming decade.

In July, the rare earth company optioned out its Australian properties to Florella Holdings Pty Limited. Under the terms of the deal, Florella can earn an 80 per cent stake in the Australian Jungle Well and Laverton properties.

Florella has doled out a large portion of its stake to Victory Mines, which is an Australian company presently wrapping up its initial public offering on the Australian Stock Exchange.

Quantum will retain a 20 per cent stake in the properties, while Florella will hold a 10 per cent interest, and Victory will earn a 70 per cent stake, based on certain conditions.

Quantum said Victory is required to reimburse the company for costs incurred during exploration work carried out in the summer of 2011, estimated at around A$100,000.

Victory will also shell out 3.75 million common shares to Quantum. Quantum expects the issued shares, which are subject to escrow provisions, to be released in about 12 months time after Victory’s public offering.